Coming soon: Cars that talk to each other

The NTU-NXP V2X test bed demonstrating how a driver receives information about an upcoming traffic light.

In a world with intelligent transportation, drivers will receive warnings of road conditions and approaching cars well before such hazards enter their field of vision.

That world isn't too far off as more companies develop technology for cars to communicate with each other and exploit real-time data from road infrastructure. Known as vehicle-to-everything (V2X) technology, experts say it's a crucial tool for governments building 'Smart Cities.' Alongside other connected technologies like electronic fee collection, V2X falls under the umbrella of intelligent transport systems (ITS).

"More roads, tunnels, or overpasses will not solve the traffic challenges in global megacities in the long run. What we need is more intelligent transport systems. V2X will bring significant benefits to society, saving lives as well as limiting congestion, travel time and carbon dioxide emissions," said Drue Freeman, senior vice president of global automotive sales and marketing at NXP Semiconductors.

V2X operates on wireless communication technology. It's capable of analyzing data like speed and direction from other vehicles and collecting information from surrounding infrastructure such as road signs and traffic lights across a two kilometer distance. The data creates 360-degree awareness for each vehicle's surroundings and may reduce multi-car accidents by 80 percent, according to a U.S. Department of Transportation study last month.

Major players and cities

NXP, a Dutch firm listed on the Nasdaq, is one of the current leaders in V2X development. The firm was first to deliver V2X chipsets for high-volume manufacturing last year, which will be implemented in select General Motors (GM) models in 2017.

It also recently announced a $16 million collaboration with Singapore's Nanyang Technological University (NTU) to build a smart mobility test bed in the Southeast Asian city-state. The project will involve 100 vehicles and 50 roadside units to research V2X technologies over the next four years.

The project ties in well with Singapore's ten-year plan to become the world's first smart nation.

"The launch of this test bed is timely as Singapore embarks on its Smart Mobility 2030 program, which outlines how the country will develop its intelligent transport systems over the next fifteen years. At the same time, the nation is also looking at the development of the next-generation Electronic Road Pricing (ERP) system using satellite positioning technology," said Lam Khin Yong, chief of staff and vice president of research at NTU.

Several European nations are also leading the way in smart transportation. The 'Cooperative ITS Corridor' project for example aims to employ ITS technologies like V2X in a highway corridor spanning Austria, Germany and the Netherlands.

Security risks

Cyber threats remain the biggest hurdle for connected vehicles. Data leakage, hacking and false messages are some of the worst-case scenarios if V2X technology gets into the wrong hands, according to recent Frost & Sullivan research.

NXP told CNBC that its technology protects drivers by encrypting all data exchanged between vehicles.

But that may not be enough as Frost & Sullivan recommends greater integration with information technology companies like Cisco and IBM to build durable security solutions such as firewalls.